The overall goal of this work is to understand the molecular and cellular basis for the acquisition of distinct cell fates along the rostrocaudal axis of the developing neural tube. The focus of the work is the differentiation of the ventral midline cell group which, in caudal regions, comprises the floor plate and, more rostrally, spans the ventral midline of the rostral forebrain. These cells play major roles in the patterning of cells and axons within the dorsoventral axis of the neural tube but the properties of the ventral cell groups differ at different rostrocaudal positions along the axis. In caudal regions, the floor plate is induce by signals from the underlying axial mesoderm cells of the notochord. In rostral diencephalon, the induction of the midline cells appears to be controlled by different axial mesoderm, the prechordal mesoderm. Furthermore, although the signalling molecule, Sonic Hedgehog, mediates the induction and differentiation of the floor plate, in the rostral forebrain a second signalling factor, BMP7, is required to act in concert with Sonic Hedgehog, apparently sensitizing neural cells to Sonic Hedgehog signalling, to induce cells with rostral character. The aims of this proposal are to examine in detail the role of BMP7 in rostralization of the ventral midline and to determine the mechanisms underlying this novel interaction between BMP7 and Sonic Hedgehog. The main experimental tool will be in vitro explant assays, which permit the response of neural plate tissue to signals from mesoderm to be monitored and manipulated. These will be used in conjunction with mice in which genes encoding components of the proposed pathways of differentiation have been functionally inactivated. Experiments will trace the site of action of BMP7 and will investigate potential mechanisms of its action on neural tissue. In addition, we will determine whether related transcription factors mediate the initial events in response to Sonic Hedgehog in distinct populations of midline cells. The possibility that additional agents are involved in the rostrocaudal patterning of ventral midline regions intermediate between rostral forebrain and caudal floor plate will also be examined. The distribution and role of BMP function-blocking proteins will be studied. Together, these experiments will lead to an understanding of the mechanisms underling the differential patterning and properties of the floor plate and ventral midline cells of the rostral forebrain. In addition, however, they will provide insight more generally into rostrocaudal patterning of neural tissue, revealing mechanisms and candidate molecules that are involved in defining this axis of the neural plate.